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By Kathy Brister
For the AJC
Editor's note: This was published in March, 2010.
This report is based on the best information currently available. As federal agencies write regulations to support the new law, and as unintended consequences inevitably appear, some things may change. Every American will be affected in some way by the coming changes to the nation's health care system. Some people will have greater access to care at more affordable prices. Some will retain their current coverage but keep a wary eye on how their health insurance premiums change. Others will feel the greatest effect on their pocketbook as taxes and fees designed to encourage near-universal coverage – and to help pay for it – take hold. Here are how the changes could affect some typical Americans.
UNINSURED
Single man, 24, no insurance
• Annual income: $8,000
• Effect on coverage: Provisions that kick in this year enable dependent children to be covered by their parents' health insurance policies until age 26. Beginning in 2014, people with incomes below 133 percent of the poverty level – about $14,400 for individuals and $29,300 for a family of four – would be eligible for Medicaid, which would be overhauled to pay doctors at the same rate that Medicare does.
• Effect on pocketbook: Could raise insurance costs for mom and dad, but the young man pays no additional tax.
UNINSURED – DENIED COVERAGE
Single woman, 48, pastry chef
Unable to get coverage through new employer because of treatment for breast cancer two years ago.
• Annual income: $32,000
• Effect on coverage: A high-risk insurance pool will open this year for people with pre-existing conditions who have been uninsured for six months. It would operate until 2014, when insurance will be widely available and insurers will no longer be permitted to deny coverage to people with pre-existing conditions or set lifetime coverage limits.
• Effect on pocketbook: No additional taxes, but with the availability of high-risk coverage would come the cost of insurance. Annual out-of-pocket costs would be capped at $5,950 for individuals and $11,900 for families.
UNINSURED
Single woman, 28, hairstylist
• Annual income: $30,000
• Effect on coverage: In 2014 she will be required to get health insurance, and insurers will be required to sell it to her. Starting that year, people making up to four times the poverty threshold – roughly $44,000 for an individual, $88,000 for a family of four – would get subsidies to help pay for insurance premiums, as well as deductibles and co-payments.
She will be able to buy coverage from private insurers through new regulated exchanges, marketplaces where individuals could shop for health plans, theoretically benefiting from prices pushed down by competition and customer volume. Insurers will be banned from some practices, such as denying coverage because of pre-existing health conditions, and they will be required to cover hospitalization, doctor visits,
Office 2010 Pro Key, prescription drugs, maternity care and other benefits.
Health care plans offered on the exchanges will have to cover at least 60 percent of medical costs; insurers also will be required to offer additional coverage covering up to 90 percent of medical costs for additional fees. Tax credits will ensure this woman's spending on premiums stays under $2,850. Maximum out-of-pocket costs for deductibles and co-payments would be capped at 30 percent of total cost.
• One other option for this woman: People under 30 could buy a policy that only pays for catastrophic coverage; insurers must allow primary care visits three times a year under these plans. Catastrophic coverage would largely kick in only after she paid $6,000 in out-of-pocket medical expenses.
• Effect on pocketbook: She would go from paying zero in insurance premiums to paying up to $2,850 a year for coverage. Starting in 2014, anyone who does not buy coverage – with a few exceptions – will have to pay penalties that start at $95 or 1 percent of income, whichever is higher. For this woman, that would mean a fine of $300 a year at first, rising to $750 (or 2.5 percent of income) by 2016 if she continues to go without health insurance. She could opt for the cheaper catastrophic coverage until she turns 30. Except for penalties, she would pay no additional taxes.
INSURED – THROUGH EMPLOYER
Single man, 34, engineer
• Annual income: $90,000
• Effect on coverage: No change. Under most scenarios, his employer would be required to continue providing coverage or face government-imposed fees in 2014. If he works for a small firm, his employer could qualify for tax credits to help offset costs.
• Effect on pocketbook: No additional taxes, but health insurance premiums could rise.
INSURED – INDIVIDUAL POLICY
Single woman, 42, self-employed lawyer
• Annual income: $140,000
• Effect on coverage: Beginning in 2014, she would have the option to buy health insurance on the new exchanges but would not get subsidies to help with premiums or out-of-pocket expenses because her income exceeds $43,320 a year.
• Effect on pocketbook: No additional taxes.
INSURED – THROUGH COBRA
Single man, 52, financial services consultant
Took a buyout from an executive banking job last year and now buys coverage through COBRA.
• Annual income: $250,000
• Effect on coverage: Once the exchange and subsidies are set up in 2014, they will effectively replace COBRA. He would have to buy coverage for himself on the exchange but would receive mandatory protections, such as a ban on insurers denying coverage for pre-existing conditions.
• Effect on pocketbook: If his income remains the same, his Medicare payroll taxes would increase from 1.45 percent to 2.35 percent starting in 2013. And he would have to pay a 3.8 percent tax on unearned income, such as investments and dividends.
INSURED – THROUGH EMPLOYER
Family of three: Mother, 35, two children
The single mom is a clothing store manager. One of the kids has asthma.
• Annual income: $50,000
• Effect on coverage: Beginning in 2014, if the mother pays more than 9.5 percent of her income in premiums or her current insurance covers less than 60 percent of her health care costs, she could buy subsidized insurance on the exchanges, as well as receive assistance with deductibles and co-payments. Her maximum out-of-pocket costs for deductibles and co-payments would be capped at 30 percent of the total cost. Insurers would be barred from denying coverage to children with pre-existing health conditions or from setting lifetime coverage limits on their care.
• Effect on pocketbook: The family could receive more coverage, perhaps for less money, and the mother would not pay additional taxes.
INSURED – THROUGH COBRA
Family of four: Parents, both 36, and two kids
Father was recently laid off from a real estate development firm, and the entire family is insured through COBRA.
• Annual income: $75,000
• Effect on coverage: Once the exchanges and subsidies are set up in 2014, they will effectively replace COBRA. The family would have to buy coverage on the exchange but would receive mandatory protections, such as the ban on insurers denying coverage for pre-existing conditions.
• Effect on pocketbook: As the exchange replaced COBRA, the family could save money on premiums. They would not pay any additional taxes.
INSURED – THROUGH MEDICARE
Family of two: Husband, 73, and wife, 70, retired
Insured through Medicare with a supplemental Medicare Advantage plan.
• Annual income: $65,000
• Effect on coverage: Medicare will pay for an annual checkup, and deductibles and co-payments for many preventive services and screenings will be eliminated. The so-called Medicare prescription drug doughnut hole will gradually narrow every year until it is eliminated in 2020. If the couple's drug expenses cause them to fall into the so-called prescription "doughnut hole," they could receive a $250 rebate this year and starting next year get a 50 percent discount on all brand-name drugs until the hole is closed in 10 years.
Also, their coverage could be affected by a Medicare pilot program scheduled to begin in 2013. It would test making single, "bundled" payments to hospitals and doctors for certain procedures, rather than making separate payments to the facility and physicians – encouraging them to work together to control quality and costs. It would move medical charges away from the fee-for-service system that pays providers separately for individual services – an arrangement critics say leads to doctors and hospitals delivering more services,
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• Effect on pocketbook: No additional taxes, but the Medicare Advantage plan, which is run by insurers under contract with the government, will see a significant drop in subsidies, potentially leaving this couple and as many as 10 million other Medicare Advantage beneficiaries with higher premiums or reduced benefits.
INSURED – INDIVIDUAL POLICY
Family of four: Parents, 43 and 45, two kids
Mom and dad are self-employed, running a family-owned auto-repair shop
• Annual income: $125,000
• Effect on coverage: Beginning in 2014, the family could buy health insurance on the new exchange, but they would not get subsidies to help with premiums or out-of-pocket expenses because their household income exceeds $88,200 a year.
• Effect on pocketbook: The family could save on premiums bought through the competitive exchange. No additional taxes.
INSURED – THROUGH EMPLOYER
Family of three: Parents, 41 and 44, one child
Mother is a primary care physician, father is a physical therapist.
• Annual income: $275,000
• Effect on coverage: No change.
• Effect on pocketbook: Starting in 2013, Medicare payroll taxes would increase from 1.45 percent to 2.35 percent, and the parents would have to pay a 3.8 percent tax on unearned income, such as investments and dividends. Premiums are forecast to rise 10 to 13 percent by 2016, according to congressional estimates. Also, their insurance costs could rise again in 2018 when a 40 percent excise tax could be imposed on health care plans valued at more than $27,500 for families (or more than $10,200 for individuals). Finally, if this family uses a tax-free flexible spending account for medical expenses,
Office Home And Business 2010, their annual contribution to the account would be capped at $2,500 in coming years.
INSURED – THROUGH EMPLOYER
Family of two: Husband, 44, wife, 45
He works as a financial planner; his wife, who does not work, suffers from multiple sclerosis.
• Annual income: $200,000
• Effect on coverage: No change to current coverage,
Office 2007 Download, but this couple could be among the first group to benefit from a long-term care program to be set up next year. People who voluntarily pay premiums into the system for at least five years could become eligible for support payments if they needed daily assistance later in life.
• Effect on pocketbook: No additional taxes, but they could pay more if insurance premiums rise. They also would have to pay premiums to qualify for long-term care coverage. If they use a flexible spending account for health care expenses, this couple could be affected by a plan that would cap contributions to such accounts at $2,500 a year.
INSURED – THROUGH MEDICAID
Single man,
Windows 7 Home Premium, 82, retired, living in nursing home
• Annual income: $23,000
• Effect on coverage: No significant change, although some additional preventive services may be covered at no additional cost.
• Effect on pocketbook: No additional taxes.
Sources: Washington Post, New York Times, Wall Street Journal, Kaiser Family Foundation, U.S. Census Bureau, U.S. Department of Health and Human Services
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